KOEI TECMO HOLDINGS CO., LTD.

Business Details

The core segment engaged in the development and sale of entertainment content. It comprises multiple brands including "Shibusawa Kou," "ω-Force," "Team NINJA," "Gust," "Ruby Party," "midas," and "AAA Studio," with diverse revenue models spanning package games, online, mobile, and IP licensing. For FY2026 (ending March 2026), sales were ¥82,541 million, accounting for approximately 93% of the Group's total sales of ¥88,393 million, making it the flagship segment.

Recent Overview

Multiple major titles contributed to results, achieving record-high sales and segment profit that exceeded the prior year.

In FY2026 (ending March 2026), 14 package game titles were released. "Shin Sangoku Musou ORIGINS" won the Excellence Award at the Japan Game Awards 2025, among other honors, and a Nintendo Switch 2 version was also released. "Nioh 3" achieved the series' fastest 1 million units sold and surpassed 10 million units in cumulative series sales. "Poko a Pokemon" surpassed 2.2 million units within 4 days of release. "Zelda Musou: Fuuin Senki" surpassed 1 million units in cumulative worldwide shipments. Driven by the contribution of these major titles, segment sales increased 5.7% year on year to ¥82,541 million, segment profit increased 16.4% year on year to ¥36,642 million, and the segment profit margin improved to 44.4%.

Key Products

Growth Drivers

• Expansion of sales scale through the continuous rollout of multiple major titles (each planned to sell over 1 million units)
• Continued revenue contribution from IP-licensed titles (such as "Sangokushi: Shinsen") and the launch of new services for IP-licensed titles (5 titles in FY2026, ending March 2026)
• Maximization of back catalog revenue through multifaceted development of existing IP (power-up kits, remasters, sequels)
• Global sales of contract-developed titles through collaboration with major publishers such as Nintendo, The Pokémon Company, and Xbox Game Studios
• Continuous rollout of multiple new titles and strengthening of global sales capabilities under the 4th Medium-Term Management Plan (starting FY2025, 3-year plan)
• Enhanced global market presence through organizational restructuring of the IP business division and marketing division

Risks

• Risk of release delays due to changes in development schedules or failure to meet quality standards for new titles
• High dependence on sales through specific platform providers (Apple, SIE, Valve, etc.), making the business susceptible to changes in platform policies
• Increased costs to meet AAA-level quality requirements amid intensifying global competition
• Foreign exchange risk (sales to North America, Europe, and Asia account for a substantial proportion of the total)
• Profit pressure in FY2027 (ending March 2027) due to increased investment in human capital and higher development and selling expenses (Group-wide operating profit, including the Entertainment Business, is projected to decrease 13.9% year on year)
• Temporary cost increases associated with relocation to the new office (Yokohama Symphostage) starting in fiscal 2026

Business Details

Centered on Koei Tecmo Wave Inc., this segment consists of two pillars: the planning, development, operation, and management of amusement facilities such as game centers, and contract development of LCD software for slot machines and pachinko machines together with associated royalty income. Although the business scale is small, accounting for approximately 5% of the overall Group, it contributes stably to earnings. The segment targets only the domestic market, with maintaining and expanding existing-store sales serving as the growth driver for facility operations, and accumulating the number of active titles serving as the driver for contract development.

Recent Overview

Both sales and profit increased significantly year on year, driven by a new store opening and strong existing-store performance.

In FY2026 (ending March 2026), one new store was opened and existing-store sales trended favorably, resulting in sales of ¥4,782 million (up 15.2% year on year). In the slot and pachinko field, the Company engaged in contract development of LCD software, with five contract-developed titles beginning operation. Segment profit improved significantly to ¥802 million (up 60.4% year on year), and the segment profit margin rose 4.8 percentage points to 16.8% from 12.0% in the prior year.

Key Products

Growth Drivers

• Favorable trends in existing-store sales at existing amusement facilities
• Expansion of royalty income through the accumulation of contract-developed slot/pachinko LCD software titles
• Increase in facility sales from new store openings
• Improvement of existing businesses and promotion of new initiatives under the 4th Medium-Term Management Plan

Risks

• Downward pressure on existing-store sales due to maturation and contraction of the amusement market
• Risk of declining demand for contract development due to stricter slot/pachinko regulations or market contraction
• Reduced profit margins due to fixed cost burdens associated with facility operations
• Increased costs and longer payback periods associated with new store openings and capital investment

Business Details

This is a business for the operation and management of rental real estate. The primary asset is KT Zepp Yokohama, a live house-type hall, which maintains a high occupancy rate by capturing demand for concerts, events, and other performances. Although the segment accounts for a small proportion of the Group's overall sales, it functions as a stable source of cash generation, and the 4th Medium-Term Management Plan also sets forth a policy of achieving stable earnings through improved operational efficiency of owned properties and maintenance of high occupancy rates.

Recent Overview

KT Zepp Yokohama maintained a high occupancy rate, with both sales and profit increasing year on year.

In FY2026 (ending March 2026), KT Zepp Yokohama maintained a high occupancy rate. Segment sales were ¥1,299 million (up 5.3% year on year from ¥1,234 million), and segment profit was ¥327 million (up 7.6% year on year from ¥304 million), with both exceeding the prior year's results. In the next fiscal year (FY2027, ending March 2027), the Company will continue its policy of securing stable earnings through improved operational efficiency of owned properties and maintenance of high occupancy rates.

Key Products

Growth Drivers

• Securing stable facility income by maintaining a high occupancy rate at KT Zepp Yokohama
• Improved facility utilization rates against a backdrop of continued expansion in demand for live entertainment
• Improved cost management through enhanced operational efficiency of owned properties

Risks

• Facility occupancy rates depend on external event demand, creating a risk of earnings fluctuation due to economic downturns or the cancellation/postponement of large-scale events
• Risk of impairment of fixed assets (the Real Estate segment has a history of recording impairment losses)
• Limited contribution to Group-wide performance, as the segment accounts for a small proportion (approximately 1.5%) of the Group's total sales

Business Details

This is positioned as a business segment not included in the reportable segments (Entertainment, Amusement, and Real Estate), and mainly comprises the venture capital business. Segment losses have continued due to the recurring nature of fund management expenses. Both sales and profit are minor relative to the Group's overall earnings scale.

Recent Overview

The segment loss expanded by ¥440 million year on year due to increased fund management expenses.

In FY2026 (ending March 2026), the segment loss expanded significantly to ¥604 million (from ¥164 million in the prior year) due to fund management expenses incurred in the venture capital business. Sales to external customers increased to ¥75 million (from ¥29 million in the prior year), but this was insufficient to offset the expanded loss. Intersegment internal sales increased slightly to ¥319 million (from ¥288 million in the prior year).

Key Products

Growth Drivers

• Growth of investee companies and monetization of fund returns in the venture capital business
• Improved capital efficiency through consolidation of Group finance functions
• Expansion of sales to external customers (an increasing trend, from ¥29 million in the prior year to ¥75 million in the current year)

Risks

• Risk that the structural loss profile will continue due to recurring fund management expenses in the venture capital business
• Risk of further loss expansion, given that the segment loss expanded by ¥440 million year on year in FY2026 (ending March 2026)
• Risk of recording investment losses due to deterioration in the financial condition of investee startups
• Highly uncertain path to profitability, given that sales to external customers are extremely small at ¥75 million